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Cheap mobile phones -- for as little as US$20 or less -- are the target of a new hardware and software platform currently under development by Philips Electronics.

The move is part of an initiative by the Dutch electronics manufacturer to make mobile phones more widely available, especially in developing countries.

By the end of this year, Philips intends to deliver a sub-US$5 system, called Nexperia Cellular System Solution 5130, that integrates all the electronics needed for a mobile phone. The phone will be capable of making calls and sending text messages via the Short Message Service (SMS). It will have a monochrome screen and be able to play polyphonic ring tones.

The system should drive the total cost of handsets based on GSM (Global System for Mobile Communications) technology below US$20, compared to US$40, which is the cost of the least expensive mobile phones currently available, the manufacturer said in a statement. Its long-term goal: to drive total handset costs below US$15 by 2008.

The initiative will be based at Philip's production facility in Shanghai, China.

Today, 77 percent of the people in the world live within range of a mobile network but only 25 percent of them subscribe to a mobile service, Philips said, citing the relatively high cost of mobile phones as the main reason.

At the 3GSM World Congress in Cannes, France, earlier this year, Motorola announced plans to deliver a sub-US$40 mobile phone, the Emerging Market Handset, for customers in the developing world.

The announcement came on the heels of an invitation by the GSM Association to manufacturers to tender for a project that seeks to build low-cost mobile phones for developing countries. The project evolved in response to concerns by network operators in several countries that identified the cost of handsets as a major obstacle to market growth.

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